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in Filmmaking
on Oct 18, 2006

Ben Fritz and Phil Gallo have an article in Variety this week titled “Biz’s share scares” that details the games the major entertainment congolomerates are beginning to enter into with the various media-sharing companies. In short, Universal Music has launched a copyright infringment lawsuit against Grouper Networks, which runs the media-sharing site Bolt.com. The two twists in the article are that Grouper is owned by Universal-rival Sony, which bought the network this summer, and that Universal Music recently signed a revenue-sharing deal with YouTube, the largest of the video-sharing sites.

Here’s the key passage in the article:

The two suits were filed just a week after UMG signed a deal with YouTube to share revenue from advertising that appears on a Web page when U Music works are being played on the No. 1 video site. Google bought YouTube for $1.65 billion the same day that several major labels announced their deals with Google Video and YouTube.

Grouper and Bolt are both relatively small video sites with significantly less traffic and content than players such as MySpace Videos, Yahoo Video and Break.com. Nonetheless, UMG said both sites had significant copyright infringement and encouraged users to further violate copyright laws. UMG may hope to use them as examples to pressure bigger Netcos into signing deals.

The question then becomes, what mechanism or accounting system exists to reward individual copyright holders from the revenue “shared” with Universal by YouTube? Do artists signed to Universal see (or do their balance statements reflect) this income? And what about all the other artists whose video is being shared on YouTube and other sites? If there’s no way of accounting for the traffic generated by a Universal artist, is Universal then sharing in the revenue generated by the material produced by non-Universal artists on YouTube who lack a threatening corporate giant in their corner?

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